Vail Daily column: Watch for changes to the FAFSA
February 25, 2016
If you have a child in college, then you're probably familiar with the Free Application for Federal Student Aid, which must be completed to help ensure that students don't miss out on federal and state grants, work-study jobs and loans. But you might not know that some important changes will be coming to the application this year, which can affect the process of filing and possibly, the amount of aid your child will receive.
Here are three key changes to watch for:
Earlier availability of the application: Currently, the application is due as soon as possible after Jan. 1 — which means the form is filled out before you've filed your taxes, which aren't due until April. As a result, you may have to estimate your income and update the information later. However, beginning with the 2017–18 school year, you can complete the application starting on Oct. 1 of the previous calendar year, rather than wait until January. At that point, you will already have filed your 2015 taxes, so you won't have to rely on estimates of your income.
For this year only, this change presents something of an anomaly — specifically, you should fill out the application as soon as possible for the 2016–’17 school year, using an estimate of your 2015 income, and then complete the application again in October for the 2017–’18 school year, using your actual 2015 income. In future years, you'll only have to complete the application once, with applications accepted beginning each Oct. 1.
Lower asset protection allowance: When you report your financial information, some of your assets are not counted toward the resources you expect to contribute to your child's education. Other assets are considered available, but a percentage of these assets can be sheltered, with the exact amount depending largely on your age and marital status. For the 2016–17 school year, this sheltered asset amount has been reduced significantly. While this reduction could have some effect on your student's aid package, it shouldn't be too severe because income, more than assets, is a bigger factor in the federal financial aid formula.
No more shared mailing list: Students can choose up to 10 colleges to receive their financial information. Previously, these schools could see the other institutions on the mailing list. But starting with the 2016–’17 application, schools will no longer have this information. This could be beneficial. Previously, if a school saw it was listed first on the application, then it might have assumed it was the student's first choice and, as a result, may not have felt the need to be flexible in awarding financial aid. Now, without a list of its competitors, a school might be more open to negotiating a more favorable aid package for your child.
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It's a good idea to stay current on the changes connected to the application because it helps determine financial aid eligibility — and financial aid is a key component of your strategy to pay for higher education.
This article was written by Edward Jones for use by your local Edward Jones financial adviser. Edward Jones and its associates and financial advisers do not provide tax or legal advice. Tina DeWitt, Bret Hooper, Charlie Wick, Kevin Brubeck, Dolly Schaub and Chris Murray are financial advisers with Edward Jones Investments. They can be reached in Edwards at 970-926-1728 or in Eagle at 970-328-4959 and 970-328-0361.
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